Construction union heavyweight John Setka received free work for his house from a Melbourne builder in return for "peace" on industrial sites, the builder has claimed.

Andrew Zaf has told the ABC's 7.30 program and Fairfax Media that he supplied a free roof and other materials for the Construction, Forestry, Mining and Energy Union (CFMEU) state secretary's house in Melbourne's western suburbs, describing the material as a bribe.

"Well I had a lot of workers I had to look after. It was the cheapest way out," he said.

"I wasn't happy about it because no-one likes to give $10,000 away, but at the end of the day it was cheaper for me to compromise myself than to risk my trucks being stopped going out to construction sites."

Mr Zaf said the material was supplied at the request of other CFMEU officials, who "passed the hat round" because Mr Setka had broken up with his girlfriend.

Mr Zaf also claims he was forced by crooked CFMEU members to hire a man he calls "Johnny the Greek", the father of a senior unionist, to work on a site in the western suburbs, and that the man once threatened to kill him.

"Well when someone threatens to kill you, what are you going to do?" Mr Zaf said when asked why he did not sack the union organiser's father.

Mr Zaf said he was forced to donate money to pay for a 1999 visit to Australia by Gerry Adams, the leader of Sinn Fein and alleged former heavyweight in the Irish Republican Army (IRA).

"Well that was part of the parcel that the union wanted, if I wanted to keep the peace because I was a supplier of material to the construction industry, to keep the peace. And they were the costs that you had to wear," Mr Zaf said.

Mr Setka tonight issued a strong denial of Mr Zaf's claims.

Alleged payment a 'show of good faith'

An intelligence file compiled by building industry investigators shows that a developer alleged Mr Setka also demanded that he pay a company owned by Mr Setka's then girlfriend, Helen Bouzas, $17,000 as a "show of good faith" that the company would win work at Melbourne's major power station demolition site.

A separate police intelligence file records that Ms Bouzas was in 2005 briefly appointed director of a waste disposal business part-owned by underworld identity Mat Tomas, an associate of Mick Gatto and an old friend of Mr Setka.

7.30 and Fairfax Media have also discovered that Mr Setka became a partner in a $2.4 million property development in inner-city Seddon in 2008 with a union mate called Frank Prevolsek, and that the work was done by employees of construction companies that rely on the CFMEU's good will.

By 2009, Mr Setka's name was removed from the development's paperwork and replaced with the name of a company directed by Mr Setka's son.

ACTU president Ged Kearney says the allegations are serious.

"The broader union movement has a zero tolerance to any sort of fraudulent, criminal or corrupt behaviour, and any allegations should be handed over to the police and dealt with accordingly," she told 7.30.

"Mr Setka has released a statement denying these allegations, so all we can really do now is make sure that due process is followed."

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